How McDonald’s Operational efficiency became its strategic advantage
From the advent of technology to the cold ice age, man has countlessly reaffirmed the law of natural selection as a key factor and catalyst of advancements, development and innovation. This unspoken rule of life has constantly led to sequences and chains of order; created, broken and re-established over and over again.
For what reason?…
Well, gratuitously the universe is inclined towards sporing a perfect system, a system where only the best of the very best is worthy of, from as small as the swamp slumps in your garden, to as large as the most complex, mechanics, building and food conglomerate merchandises, not even drug cartels are left out.
…“Survival of the fittest”
Every existing system just has to be fit! There’s no sleeping on the job.
The Speedee Service System by the McDonald’s
A very relatable enumeration of this is the embryonic development of our most beloved McDonald’s — from a small-town diner to the multinational food network we now know it as.
Sometime in the 1940s, brothers Maurice and Richard McDonald started the first McDonald’s outlet in San Bernardino, California, a mildly populated city east of Los Angeles, at this time the city had just begun to bloom and gain attraction from near locals and foreigners, both large and small infrastructures and enterprises were emerging expeditiously. Most definitely the food sector wasn’t an exception.
With enough and steady demand, competition crept in amongst indigenous restaurants and only the most capable could get the lion’s share of the revenue. Before 1948, a hungry Jack had to wait light years before he could peacefully satisfy his hunger for an average Beef Burger.
No kidding, it took that long!
But in truth, people really had no option but to wait, as we know cooking isn’t so much fun either. A few months into the year 1948, after failing in the movie industry, the McDonald brothers invented the SPEEDEE SERVICE SYSTEM. As trial procreates innovation they decided to focus on producing lower-priced burgers at the fastest track time possible.
How were they going to do this?
Richard, the younger of the brothers pitched the idea — it was a revolutionary technique. However easier said than done, the driving-in restaurant had to be restructured and revamped — a financial and operational risk they had to take despite the business not flourishing. For sure they needed leverage in the market.
This success came with a lot of sacrifices, silverware were deployed and all their 20 carhops had to send out new resumes. The brothers weren’t joking around as all 20 of them were fired. An old employee in an interview once recapped how they had to streamline the menu into just nine essential, most profitable products-cheeseburgers, coffee, hamburger, three different soft drinks, potato chips, milk and pie.
A remarkable source of this inspiration was the famous “Henry ford automobile assembly line”. However, instead of flipping burgers, Henry flipped tires. From the multi mixer to the Griddle, fryer to the front counter, the McDonald brothers had created a well-structured combination of procedures like no other restaurant had ever implemented.
For the first time in California and probably the whole of the United States, 15 cents was just enough to get you a delicious well filling hamburger.
Verily McDonald’s wasn’t known just for their golden arcs but their spectacular and very affordable food menu, all thanks to the SPEEDY SERVICE SYSTEM.
“We’re not in the hamburger business. We’re in show business.” — Ray Kroc
With a slash in labour expenditure and increased sales rate, the brothers had seen their net invested capital double by the year 1950. A 12-person crew was all it took, each with individually specified roles. Customers trooped in units, hundreds every day from all over the city, why not, who doesn’t want quality, quantity and affordability? This created so much rift and envy from other restaurants, none of which made any real difference. By 1958, they had sold 100 million burgers. Revenue grew from a steady $200,000 yearly to a whopping $350,000.
McDonald’s didn’t just win the food race, they wrote down new rules to the game!
In Conclusion
Just like other sectors of a functional economy witness tidal shifts in order, the underdogs from time to time steal the market from the big boys and a new system is born.
Over and over again.
As Productivity is proportional to resource indulgence, efficacy and efficiency are also important constants in staying ahead in any business. Every cooperation, business or enterprise would most certainly die out if needed and meaningful changes aren’t made, changes could come from finance management, customer relations, branding and publicity, or any other sector at all irrespective of the relevance because in the end they all ripple out into a better system.
Just as Tesla has its fast-developing electric car series gradually disrupting the already fixed gasoline-based market, McDonald’s disrupting the food industry introduced new competencies in its operational efficiency. Even the iPhones we see everywhere today came with little and gradual improvements and innovations in operational systems.
Operating efficiency is all about streamlining, focusing on the essentials, and making the best of the littlest available resources to increase output from the same input, thereby creating a better business or enterprise.
